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Financial Planning / Tax Strategies
|Subject: Re: how to report Executor income||Date: 9/4/2013 9:55 AM|
|Author: irasmilo||Number: 119131 of 122021|
DH is Executor on two estates that may wrap up this year. He will be able to get paid for his time, and so I am thinking that he will receive a 1099 for that income that we will report on our taxes. I am also thinking that since this will be 1099 income, there will be no FICA, and so won't he owe the other 7.5% of FICA like on his self-employment income? And does that mean this gets reported on his Schedule C? Or is this considered something else, and just gets lumped in somewhere on our 1040 with no additional FICA taken out anywhere?
The fees he receives as Executor should be reported to him on Form 1099-MISC if greater than $600. How the fees get reported on your (if filing jointly) return depends on whether he was acting in a personal or professional capacity with regard to being an Executor.
If he routinely acts as an Executor, or acting as Executor would be a logincal extension of other professional services he provided to the deceased, the income would be reported on Schedule C and be subject to SECA (both sides of FICA/medicare).
However, if he was named as Executor due to his status as a family member or personal friend and he doesn't routinely serve as an Executor, then the income is reported on Line 21, Other Income and is not subject to FICA/medicare (SECA). The 1099-MISC will probably report the fees in Box 7, but they could appear in Box 3. If Box 7, you can expect a follow-up letter from the IRS, since the IRS assumes all Box 7 payments are subject to SECA. All you will have to do is explain the nature of the payment and the IRS will be satisfied.
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